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Direct liability under TCPA possible when third party sends fax, 11th Circuit rules

A Telephone Consumer Protection Act defendant can be directly liable for an unsolicited fax sent on its behalf by a third party, the Eleventh U.S. Circuit Court of Appeals has ruled, reversing summary judgment in the defendant's favor.

Last year, a federal court judge dismissed a putative class action complaint against Dr. John Sarris, a Florida dentist. In 2003, Dr. Sarris hired a marketing manager he gave “free rein” to market his practice. The manager hired Business to Business Solutions to send out mass fax advertisements, for which the dentist paid $420.

Plaintiff Palm Beach Golf, a golf equipment store, sued Sarris as one of 7,085 recipients of his ads. Sarris successfully moved for summary judgment arguing that he could not be directly liable under the statute as he was not the actual sender of the ad and the plaintiff failed to allege vicarious liability.

In addition, the court held that because the golf store could not provide a printed copy of the fax – or prove that anyone had seen it – it lacked Article III standing to bring the suit in the first place.

Unfortunately for the defendant, the Eleventh Circuit reversed on both counts.

First the three-judge panel found that the plaintiff had standing to sue. The specific injury targeted by the TCPA is the sending of the fax and resulting occupation of the recipient’s telephone line and fax machine – not that the fax was actually printed or read, the court said.

“While the record does not demonstrate that the fax advertising defendant’s dental practice was printed or seen by any of Palm Beach Golf’s employees, there is undisputed record evidence that the fax information was successfully transmitted by B2B’s fax machine and that the transmission occupied the phone line and fax machine of Palm Beach Golf during that time,” the court wrote, citing similar decisions from courts in Georgia, Illinois, and New Jersey.

Congress intentionally wrote the TCPA to be a “bounty” statute permitting recovery based on a statutory violation that did not require an actual financial loss, the court added.

Turning to the merits of the dispute, the panel rejected the district court’s reliance on the Federal Communication Commission’s 2012 declaratory ruling in In re DISH Network Inc. That ruling was limited to voice calls and text messages, the court said, and therefore the FCC’s interpretation of a “sender” in that ruling was inapplicable to the instant dispute, which involved fax ads.

The statute itself is ambiguous because it “fails to identify whether, for purposes of section 227(B)(1)(C), the sender is the advertiser, a fax broadcasting service hired by the advertiser, the common carrier whose network is used to send the fax, or whether multiple individuals or entities are ‘senders,’” the panel explained.

Recognizing the ambiguity, the FCC issued an opinion in 1995 to clarify “that the entity or entities on whose behalf facsimiles are transmitted are ultimately liable for compliance with the rule banning unsolicited facsimile advertisements, and that fax broadcasters are not liable for compliance with this rule.”

Finding that opinion to be consistent with Congressional intent, the court deferred to the FCC’s interpretation and found that an entity can be directly liable under the statute where a third party actually transmits the fax on its behalf.

“[A] person whose services are advertised in an unsolicited fax transmission, and on whose behalf the fax is transmitted, may be held liable directly under the TCPA’s ban on the sending of junk faxes,” the court concluded.

The panel also found sufficient evidence that a jury could find the fax at issue was sent on behalf of Sarris, who gave his marketing manager “free rein” to market his dental practice and paid B2B to transmit the ads. “While there is contrary equivocal evidence that the final draft of the advertisement used may not have been approved by the defendant, under the summary judgment standard, the question of on whose behalf the fax advertisement was sent is a question to be decided by a jury,” the court wrote.

Sarris might also be liable for conversion under Florida law, the court held. Despite the de minimis cost of printing a one-page fax, the panel said state law does not require that the property have monetary value in order to be converted and a minimal value does not warrant dismissal.

The court reversed summary judgment for the dental practice and remanded the case to the federal district court.

Why it matters: The Eleventh Circuit adopted a broad interpretation of the phrase "to send" under the TCPA, holding that a defendant can be directly liable for unsolicited fax advertisements transmitted by a third party on its behalf.